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Democracy & Technology Blog Energy is not Zero Sum

My friend Rich Karlgaard’s latest post at his Forbes Digital Rules blog reminded me of another major debate consuming the U.S. and China right now: energy. Karlgaard laments the disease of zero-sum thinking, which presumes one party’s gain is necessarily another party’s loss. Zero-sum thinking, more than anything else, is history’s chief culprit leading to war and depression. For some reason, it has infected untold generations of economists and politicians, and now it infects the debate over U.S.-China trade and the supposed world-wide race for the globe’s supposedly finite supply of energy. First the U.S. this summer blocked China CNOOC’s attempted acquisition of Unocal, an American company with mostly Asian petroleum assets, and now it seems that Beijing is resisting entreaties by BP (British Petroleum) to acquire a majority stake in China’s large 80-percent-state-owned oil company Sinopec. Some commentators see devlish designs on the part of the Chinese, who want “to build global dominance in core industries….”
Undoubtedly, 3 billion new people entering the modern economy will substantially increase world energy consumption. But does more energy demand mean there will be less energy to go around? Does wealth in Asia imply a lower standard of living in the West? Does energy have to be a source of international tension, or even a military flashpoint?
It does not. As Peter Huber and Mark Mills make clear in their pathbreaking book The Bottomless Well, more energy demand means more wealth. More wealth means better technology and more resources by which to find, extract, and process more and new forms of energy. The cycle repeats. We have reached the “twilight of fuel” and will “never run out of energy,” Huber and Mills emphatically declare. Energy is decidedly not zero-sum. It is, in fact, infinite.
But this is only true if we heed their call. It will not be true if we restrain energy usage or discourage technologies and facilities that extract, refine, generate, and deliver energy. China is building some 50 new nuclear power plants over the coming two or three decades. The U.S. has not built one since the late 1970s, which is also the last time we built an oil refinery. Washington and the states are paralyzed. This summer’s energy bill may have allowed for one new nuclear plant, but no new refineries. This effective ban on energy technology and investment is one of the very few things that actually could lead to a flashpoint, a self-imposed energy crisis. When supply is artificially constrained, then we suddenly do live in a zero-sum world, and potentially will face the horrors of zero-sum war and pestilence.
-Bret Swanson

Bret Swanson

Bret Swanson is a Senior Fellow at Seattle's Discovery Institute, where he researches technology and economics and contributes to the Disco-Tech blog. He is currently writing a book on the abundance of the world economy, focusing on the Chinese boom and developing a new concept linking economics and information theory. Swanson writes frequently for the editorial page of The Wall Street Journal on topics ranging from broadband communications to monetary policy.